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Thursday, November 18, 2010

CARREFOUR SAID TO CANCEL SALE OF MALAYSIA, SINGAPORE AFTER UNITS REVIEW

Carrefour SA, the world’s second- largest retailer, canceled plans to sell its businesses in Malaysia and Singapore after a strategic review, according to a person familiar with the situation.

The Paris-based company decided it would create more value by keeping the units than by selling them, said the person, who declined to be named as the plans have yet to be disclosed.

Carrefour this week agreed to sell its business in Thailand to French rival Casino Guichard-Perrachon SA for 868 million euros ($1.17 billion) as part of a plan to focus on markets such as China and Latin America, where it may be in the top two. Some of the proceeds from that sale will be used to develop the business in Malaysia, the person said.

Carrefour’s Malaysian and Singapore operations may be valued at $350 million to $400 million, four people familiar with the matter said in July.

“If the offer price was very dilutive, it makes more sense to hang on to the assets,” Fabio Fazzari, an analyst at Equita Sim in Milan, said in a phone interview. “I don’t think this will have large repercussions for Carrefour or for the sector in general. Carrefour’s focus is on its hypermarket strategy.”

Lars Olofsson, Carrefour’s chief executive officer, has pinned the retailer’s turnaround on a $2 billion revamp of its hypermarket, or superstore, format in Europe during the next two years. Revenue growth has stagnated at the stores, which account for 40 percent of total sales, as consumers buy groceries closer to home or opt for department and specialty stores for apparel and beauty products.